GULZAR AHMED, J.-- The following question of law has been raised for determination by this Court in all the three above ITCs:-- "Whether under the facts and circumstances of the case, the interest payment relatable to work in progress is allowable as Revenue expenditure u/S. 23{i)(vii) of the Income Tax Ordinance, 1979....................."
2. In ITC No. 70/2000 the following additional question of law is also raised:-- "Whether under the facts and circumstances of the case, the department has a right to determine under statement of cost of Rs. 664,067,655/- in the year of 1992-93 and was rightly added back to the total income of the case "
3. Mr. Muhammad Athar Saeed, learned counsel for the respondent has taken a preliminary objection that the. Two questions raised before this Court in the above ITCs are materially different from those referred by the applicant to the Income Tax Appellate Tribunal under Section 136(i) of the Income Tax Ordinance, 1979 for reference to this Court. He has stated that this Court is only required by law to consider only such questions of law which are raised before the Income Tax Appellate Tribunal. He has stated that on this ground alone the three ITCs filed by the applicant are liable to be dismissed. He has further contended that the first question which is common in all the three ITCs has already decided by the Hon'ble Supreme Court of Pakistan by order dated 10.7.2000 passed on CPLA(s) Nos. 19?-K to 201-K of 2000 Commissioner of Income Tax Companies Zone-V, Karachi Vs. M/s. National Refinery Ltd., Karachi and has placed a copy of this order on record. He has further argued that while deciding the reference application of the applicant, the Income Tax Appellate Tribunal has elaborately considered the question raised before it and dismissed the reference applications and no question of law arise for determination by this Court. Mr. Muhammad Farid learned counsel appearing for the applicant has supported the application but was not been able to answer the preliminary objection raised by the respondent's counsel. With regard to the second submission of the counsel for the respondent that the three common questions raised in these applications are covered by the order of the Hon'ble Supreme Court of Pakistan, the learned counsel for the applicant stated that the question raised in these applications is different from the one which was decided by the Hon'ble Supreme Court of Pakistan inasmuch as in the present applications the question is whether respondent is entitled to benefit of Section 23(i)
(vii) of Income Tax Ordinance, 1979 while installation of expansion unit is going on. He stated that in the case before the Hon'ble Supreme Court the unit was already in business.
4. We have considered the arguments and have gone through the record. To appreciate the preliminary objection raised from the side of the respondent the two questions of law which were referred to the Income Tax Appellate Tribunal by the applicant for reference to this Court are reproduced as follows:- "Whether under the facts and circumstances of the case, the interest paid on capital borrowed for expansion of unit is allowable as revenue expenditure "
"Whether under the facts and circumstances of the case depreciation allowed on leased purchased assets in accordance with Circular No. 9 of 1943 means the transfer of ownership to the assessee "
5. It is pertinent to note that the established law on this point is that the High Court will only consider question of law which has arisen out of order of the Tribunal or question which was raised before the Tribunal and was dealt with by the Tribunal or question which was not raised before the Tribunal but was dealt with by the Tribunal or that question which was raised but has not been dealt with by the Tribunal. Reference in this connection is made to the case of CIT Vs. Gohar Ayoob Khan (1995) 71 Tax 271 (H.C. Lah.) - 1995 PTD 1074 which case also is referred in the case of from Ghee Mills (Pvt.) Ltd., Lahore Vs. Income Tax Appellate Tribunal, Lahore (1998) 78 Tax 188 (H.C. Lah.).
On examination of first question raised before the Tribunal and the question now raised in these applications, we find that there is material change in them. The question before the Tribunal was with regard to interest paid on capital borrowed for expansion of unit whereas in the above applications the question raised is of payment of interest relatable to the work in progress. There is considerable difference in the matter of fact of expansion of unit and the work in progress, In the case of the term of the expansion of unit, the admitted fact that goes with it is that there already exists a unit which is being expanded by making of addition in it whereas the work in progress does not carry such admission but rather creates a situation where one may consider it to be a new work altogether. Thus in our view, there is material difference in question of law that was referred by the applicant to the Tribunal for reference to this Court and the question of law that has now been raised by the applicant in this Court. As regards the second question of law which has been raised only in ITC No. 70/2002. On careful examination, we find that the question before the Tribunal was with regard to the transfer of ownership of assets purchased through lease on which depreciation was allowed as per Circular No. 9 of 1943 whereas the question raised before this Court is with regard to the right of the department to add back to the total income an amount of Rs.
664,067,655/- as under statement of cost. So in substance the question before the Tribunal was of transfer of ownership of assets purchased through the mode of lease there was no mention of the terms "under statement of cost" in it. Legally, the form of acquiring of ownership of assets is dealt with on different set of law from that of under statement of cost. Both these .Concepts are wide apart and will be followed by different consequences on their determination.
6. Thus, we find that the questions raised before this Court in the present applications were neither raised nor were considered by the Tribunal and these applications, therefore, to be not maintainable.
7. As regards the second submissions of the respondent's counsel that the common question raised in these applications has been decided by the Hon'ble Supreme Court of Pakistan. We have gone through the order of the Hon'ble Supreme Court and agree with the respondent's counsel that such question has been decided by the order of the Hon'ble Supreme Court. The question before the Hon'ble Supreme Court was the same as' was referred by the applicant to the Tribunal for reference to this Court. The submission of the learned counsel for the applicant that Hon'ble Supreme Court has not considered the point that the unit was not in business is incorrect as the order of the Hon'ble Supreme Court specifically refers to this aspect in the following words:- "..... It is not disputed that the respondent's business was in full swing and in running condition when the loan was obtained for the purpose of running the units "
8. The respondent before the Hon'ble Supreme Court is also the respondent before this Court. We also find that the second question raised in ITC 70 of 2002 is in actual analysis is a question of fact as basically it raises question of nature of transaction which the Tribunal has found to be that of advance by IDB to the respondent for purchase of machinery/plant. No illegality has been shown in the finding of the Tribunal.
For the foregoing reasons, all the above three ITCs are dismissed.